What can a Coronavirus Stimulus Plan do for you?
Well, dealing with debts is an extremely stressful situation. Further, coupling it with the corona virus pandemic makes it even more challenging. The global spread of corona virus has delved the world deeper into the debt, making it much worse than the last big crisis that hit. This situation has led to the shifting of debts from individuals to corporations. As the businesses deal with the sudden disruption in their cash flows, the worst is being faced by the new generation of companies who are struggling to pay their debts. This includes the class of companies whose prime basis of survival is by issuing new debts. The longer the pandemic lasts, the greater are the chances that these companies may trigger a chain of defaults, in the same as it was in 2008 due to subprime mortgages.
This once in a century pandemic has resulted in a record level of debts. The corporate sector of the US faces a debt of 75% of the country’s gross GDP, thus shattering the previous debt record of 2008. Corona virus has resulted in “demand shock” where workers are being laid off; outputs are falling resulting in low incomes, which restricts the ability of individuals and businesses to spend. This is leading to a downfall in the economy and increasing the level of debt. Individuals and companies are in deeper debt now. They have to pay the debts even if the jobs and customers are declining in the weakening economy. This results in less money left for spending on other things, thus leading to uncertainty in the longer term.
Stimulus package- A step to provide you financial relief
But the question that arises is how to cope with such a situation and what relief options are available. The relieving news is that the federal government has passed a $2 trillion emergency relief bill to provide financial relief to American individuals and businesses that are impacted by this pandemic. The stimulus bill provides debt relief options for individual to large business houses. The provisions of the plan designed to help individuals, families, and workers are:
Cash assistance to families and individuals
- The individuals who are making $75000 or less will be disbursed $1200.
- Married couples who earned below $150000 will be paid a check of $2400.
- Children below the age of 17 will be disbursed $500.
- Severely distressed large business houses will receive large grants or loans.
However, individuals earning more than $99000 or more and couples earning $198000 will not be given any sort of cash assistance.
Boost to unemployment insurance benefits
To help the workers who have been hit by this crisis, the bill has widened the unemployment insurance eligibility and has boosted up the weekly payments. Individuals who are filing for unemployment shall receive an additional amount of $600 per week for a period of four months apart from regular state benefits they are getting.
Also, the eligibility criteria for the individuals who are partially unemployed, employed but are not able to work due to the outbreak, independent contractors and the self employed has been expanded under the bill.
Student loan payments, interests, and collections
If you are struggling with the student loan debt, you may find some relief by the stimulus package. The relief provided by the stimulus bill with regards to student loan debt includes: Severely distressed large business houses will receive large grants or loans.
- The monthly payments shall be frozen until September 30. This is optional, but you can prevent penalty or accrual of interest if you take benefit of this moratorium.
- If you are pursuing a student loan forgiveness program, the six months that end on September 30 shall be included whether or not you’re making any payments during that period.
- The debt collection against borrowers of federal student loans to be suspended.
Safeguard you against foreclosure and eviction
Since, the slowdown of the economy could result in stress when it comes to paying off your rent or mortgage. So the stimulus bill save people from eviction. Homeowners who are facing difficulties as a result of coronavirus are eligible for:
- Stopping the collection of federally backed mortgage loan for 60 days at least.
- The foreclosure proceedings for federally backed mortgages cannot begin for 60 days starting from March 18. The lenders shall not charge any interest, fees or penalties during this period.
- If you rent a portion of federally backed mortgaged property to tenants, you have no right to evict them for 120 days, if they fail to pay rent.
Need financial help in uncertain times?
We’re here for you
Stimulus package may ease out some burden from your head. But at the same time, if you are facing debts and are worried about making payments, you may have to take some additional actions. Debt advice is here to help you get the financial relief during this uncertain time. We will help you to come out from this crisis and take a step towards a better financial future.